A. Clinical Review Tool for Utilization Review of Substance Use Disorder Treatment

Currently, Insurance Law § 4902(a)(9) and Public Health Law § 4902(1)(j) require issuers and their agents that conduct utilization review (“utilization review agents”) for substance use disorder treatment to use recognized evidence-based and peer reviewed clinical review criteria that is appropriate to the age of the patient and is deemed appropriate and approved for use by the Commissioner of the Office of Alcoholism and Substance Abuse Services (“OASAS”), in consultation with the Commissioner of Health and the Superintendent of Financial Services. Chapter 69 amended those sections to require that issuers and their utilization review agents use evidence-based and peer reviewed clinical review tools designated by OASAS that are appropriate to the age of the patient and consistent with the treatment service levels within the OASAS system. Chapter 69 further requires all approved tools to have inter-rater reliability testing completed by December 31, 2016. Issuers and utilization review agents must update their processes to reflect the new requirements with respect to health insurance policies or contracts issued, renewed, modified, altered or amended on or after January 1, 2017.

B. Prescription Drug Coverage for Substance Use Disorder

Under current law, large group health insurance policies or contracts¹ are not required to cover prescription drugs. Chapter 69 added new Insurance Law §§ 3221(l)(7-a) and 4303(l-1) to require every large group policy or contract that provides medical, major medical or similar comprehensive-type coverage to provide coverage for medication approved by the U.S. Food and Drug Administration (“FDA”) for the detoxification or maintenance treatment of a substance use disorder. An issuer must include the new coverage in its large group policies or contracts that are issued, renewed, modified, altered or amended on or after January 1, 2017. Accordingly, issuers must amend any large group policy or contract that provides medical, major medical or similar comprehensive-type coverage but does not include coverage for medication approved by the FDA for the detoxification or maintenance treatment of a substance use disorder. Large group health insurance policies and contracts that currently cover prescription drugs should already be covering medication approved by the FDA for the detoxification or maintenance treatment of a substance use disorder.

Chapter 69 also added new Insurance Law §§ 3216(i)(31-a), 3221(l)(7-b), and 4303(l-2) to require every policy or contract that provides medical, major medical or similar comprehensive-type coverage and provides coverage for prescription drugs for the treatment of a substance use disorder to include immediate access, without prior authorization, to a five-day emergency supply of prescribed medications otherwise covered under the policy or contract for the treatment of a substance use disorder where an emergency condition exists, including a prescribed drug or medication associated with the management of opioid withdrawal or stabilization, except where otherwise prohibited by law. Coverage of an emergency supply includes medication for opioid overdose reversal otherwise covered under the policy or contract when prescribed to an individual covered under the policy or contract.

Insurance Law §§ 3216(i)(31-a), 3221(l)(7-b), and 4303(l-2) further provide that coverage of the five-day emergency supply of medication may be subject to copayments, coinsurance, and annual deductibles that are consistent with those imposed on other benefits within the policy or contract, and prohibit issuers from imposing an additional copayment or coinsurance on an insured who received an emergency supply of medication and then received up to a 30-day supply of the same medication in the same 30-day period in which the emergency supply of medication was dispensed. However, issuers may impose a copayment or coinsurance on the initial emergency supply of medication in an amount that is less than the copayment or coinsurance otherwise applicable to a 30-day supply of the medication, provided that the total sum of the copayments or coinsurance for an entire 30-day supply of the medication does not exceed the copayment or coinsurance otherwise applicable to a 30-day supply of the medication. These new five day emergency supply requirements apply to policies or contracts issued, renewed, modified, altered, or amended on or after January 1, 2017. The Department of Financial Services (“Department”) will provide model contract language to assist issuers with compliance.

A. Coverage in Residential Settings

Insurance Law §§ 3216(i)(30), 3221(l)(6) and 4303(k) currently require every policy or contract that provides hospital, major medical or similar comprehensive coverage to include inpatient coverage for the diagnosis and treatment of substance use disorder, including detoxification and rehabilitation services. Chapter 71 amended those sections to clarify that inpatient coverage includes unlimited medically necessary treatment for substance use disorder treatment services provided in a residential setting as required by the federal Mental Health Parity and Addiction Equity Act of 2008, codified at 29 U.S.C. § 1185a (“MHPAEA”). Notwithstanding this statutory clarification, in order to comply with MHPAEA, issuers currently should be covering services in residential treatment facilities for mental health or substance use disorder (“MH/SUD”) if intermediate levels of care are covered under the medical and surgical benefits of their policies and contracts. The Department’s model contract language specifically includes language addressing coverage of services provided in residential settings. Issuers that utilize the Department’s model contract language currently are in compliance with the requirement for coverage of residential treatment. Issuers that have approved policies or contracts that do not use the model contract language and do not include a specific reference to coverage in residential settings must revise their policies or contacts upon issuance or renewal.

B. Prohibition against Preauthorization and Concurrent Review During First 14 Days of Inpatient Admission for Treatment of Substance Use Disorder

Chapter 71 also added new Insurance Law §§ 3216(i)(30)(D), 3221(l)(6)(D), and 4303(k)(4), which apply to New York facilities that are certified by OASAS and participate in the issuer’s provider network. These new provisions prohibit issuers from requiring preauthorization. These provisions further prohibit issuers from performing concurrent utilization review during the first 14 days of the inpatient admission provided the facility notifies the issuer of both the admission and the initial treatment plan within 48 hours of the admission. If the facility does not notify the issuer of both the admission and the initial treatment plan within 48 hours of the admission, then the issuer may perform concurrent utilization review immediately.

In addition, these sections require the facility to perform daily clinical review of the patient, including periodic consultation with the issuer, to ensure that the facility is using the evidence-based and peer-reviewed clinical review tool utilized by the issuer that is designated by OASAS and appropriate to the patient’s age in order to guarantee that the inpatient treatment is medically necessary for the patient. An issuer’s utilization review of the inpatient treatment may commence after the 14th day of the inpatient admission and may include a review of all services provided during the first 14 days of the inpatient treatment. However, an issuer may deny coverage for any portion of the initial 14-day inpatient treatment on the basis that the treatment was not medically necessary only if the inpatient treatment was contrary to the evidence-based and peer-reviewed clinical review tool utilized by the issuer and designated by OASAS. An insured shall not have any financial obligation to the facility for the inpatient treatment other than any copayment, coinsurance, or deductible otherwise required under the policy or contract.

An issuer must include these new requirements in policies or contracts that are issued, renewed, modified, altered or amended on or after January 1, 2017. The Department will provide model contract language to assist issuers with compliance.

C. Copayments and Coinsurance for Limited Initial Prescription of an Opioid Drug

Chapter 71 also added a new Public Health Law § 3331.5(b), which prohibits a practitioner from prescribing more than a seven-day supply of any schedule II, III, or IV opioid to an ultimate user upon the initial consultation or treatment of the user for “acute pain” as defined in § 3331.5(c). It permits the practitioner to issue any appropriate renewal, refill, or new prescription for the opioid or any other drug for the same pain upon subsequent consultations. At the same time, Chapter 71 also added new Insurance Law §§ 3216(i)(33), 3221(k)(21) and 4303(qq), which require a policy or contract providing prescription drug coverage subject to a copayment to charge a copayment for a limited initial prescription of an opioid drug that is either: (1) proportional between the copayment for a 30-day supply and the amount of drugs the patient was prescribed; or (2) equivalent to the copayment for a full 30-day supply of the opioid drug, provided that no additional copayments may be charged for any additional prescriptions for the remainder of the 30-day supply.

This new requirement is effective as of July 22, 2016. Issuers should administer their policy and contract forms in accordance with this requirement pending submission and approval of amended policy and contract forms.

D. Financial Requirements and Treatment Limitations for Substance Use Disorder Treatment

Insurance Law §§ 3216(i)(30), 3216(i)(31), 3221(l)(6)(A), 3221(l)(7)(A), 4303(k)(1), and 4303(l)(1) expressly state that inpatient and outpatient coverage may not apply financial requirements or treatment limitations to substance use disorder benefits that are more restrictive than the predominant financial requirements and treatment limitations applied to substantially all medical and surgical benefits covered by the insurance policy or contract. These sections further state that the coverage must be provided consistent with MHPAEA. Chapter 71 amended Insurance Law §§ 3216(i)(30), 3221(l)(6)(A), and 4303(k)(1) to include a reference to parity for utilization review requirements, consistent with MHPAEA.

MHPAEA prohibits issuers providing medical and surgical benefits and MH/SUD benefits from applying financial requirements or quantitative and non-quantitative treatment limitations (“QTLs” and “NQTLs”) to MH/SUD benefits that are more restrictive than the predominant financial requirements or treatment limitations that are applied to substantially all medical and surgical benefits covered by the policy or contract.² Insurance Circular Letter No. 5 (2014) and Insurance Circular Letter No. 4 (2016) provide guidance to issuers about MHPAEA requirements.

A. Initial Preauthorization Adverse Determinations

Issuers and utilization review agents must make preauthorization decisions within prescribed timeframes that must be shortened for a “claim involving urgent care.” A “claim involving urgent care” is defined by 29 C.F.R. § 2560.503-1(m)(1) as any claim for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations: (1) could seriously jeopardize the life or health of the insured or the ability of the insured to regain maximum function; or (2) in the opinion of a physician with knowledge of the insured’s medical condition, would subject the insured to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim.

Issuers and utilization review agents must make urgent preauthorization determinations and provide notice to the insured or the insured’s designee and the insured’s provider within 72 hours of receipt if the request is complete when submitted, with written notice to follow within three business days of receipt of the request. If the request is incomplete, issuers and utilization review agents must request any additional information within 24 hours. The insured, the insured’s designee, and the insured’s provider must be given 48 hours to submit the information. Issuers and utilization review agents must make a decision and provide notice to the insured or the insured’s designee and the insured’s provider within 48 hours of the earlier of the receipt of the information or the end of the 48-hour period. Written notification must follow within the earlier of three business days of receipt of the information or three calendar days after the verbal notification.

Additionally, under Insurance Law § 4903(c) and Public Health Law § 4903(3), if a request for inpatient substance use disorder treatment is made at least 24 hours prior to discharge from an inpatient substance use disorder treatment admission, then issuers and utilization review agents must make a decision within 24 hours of receipt of the request and provide coverage for the inpatient substance use disorder treatment while the determination is pending. See also Insurance Circular Letter No. 6 (2015).

Issuers and utilization review agents must make non-urgent preauthorization decisions within three business days of receipt if the request is complete when submitted. If the request is incomplete, issuers and utilization review agents must request any additional information within three business days. Issuers and utilization review agents must give the insured, the insured’s designee, and the insured’s provider 45 calendar days to submit the information. Issuers and utilization review agents must make a decision within three business days of receipt of the information or within 15 calendar days of the end of the 45 day period if the information is not received. Notice of the determination must be provided to the insured or the insured’s designee and the insured’s provider by telephone and in writing.

B. Preauthorization Internal Appeals

Issuers and utilization review agents must make expedited appeal decisions within the earlier of 72 hours of receipt of the appeal or two business days of receipt of the necessary information to conduct the appeal.

Additionally, if an issuer or utilization review agent denies a request for inpatient substance use disorder treatment that was submitted at least 24 hours prior to discharge from an inpatient substance use disorder treatment admission, and the insured or the insured’s provider files an expedited appeal, a decision must be made within 24 hours of receipt of the appeal and coverage must be provided for the inpatient substance use disorder treatment while the appeal is pending. See also Insurance Circular Letter No. 6 (2015).

Under 29 C.F.R. § 2560.503-1(i)(2)(ii), issuers and utilization review agents must make non-expedited preauthorization appeal decisions within 30 days from receipt of the appeal if the issuer or utilization review agent has one level of internal appeal, or 15 days from receipt of the appeal if the issuer or utilization review agent has two levels of appeal.

C. Formulary Exception Process

Individual and small group health insurance policies or contracts must have a standard and expedited formulary exception process for an insured or an insured’s designee and the insured’s prescribing health care professional to request a clinically-appropriate prescription drug that is not otherwise covered by the issuer. An issuer must make a determination and notify the insured or the insured’s designee and the prescribing health care professional no later than 72 hours after receipt of a standard formulary exception request and no later than 24 hours after receipt of an expedited formulary exception request. If coverage is denied under either a standard or expedited formulary exception request, then the insured is entitled to an external appeal in accordance with Articles 49 of the Insurance Law or Public Health Law.

D. External Appeals

Pursuant to Title II of Articles 49 of the Insurance Law and Public Health Law, 11 NYCRR 410, and 45 C.F.R. § 147.136, an insured who receives a denial for preauthorization of health care services or a denial of a formulary exception request, including substance use disorder treatment, must be provided a right to an independent external appeal. External appeal rights must be provided after the first level of internal appeal and the insured may not be required to obtain a second level of internal appeal with the issuer or utilization review agent in order to be eligible for an external appeal.